The Saudi Arabian Monetary Authority has transferred funds to local banks using blockchain technology.
The Saudi Arabian Monetary Authority (SAMA), the country’s central bank, announced that it used blockchain technology to deposit funds to local banks.
An official statement published by SAMA said that the funds were a part of the bank’s initiative to enhance its “capabilities to continue its role in providing credit facilities.” The bank did not specify the exact amount of the fund transfer.
SAMA’s involvement with blockchain technology
The Middle East is seeing widespread adoption of blockchain technology in the finance sector. SAMA has performed enormously in terms of using blockchain for remittances for banks located in Saudi and the United Arab Emirates.
In 2018, SAMA also partnered with the UAE’s central bank to develop a digital currency that can be used for cross-border transactions between the two countries.
Reflecting on their recent transaction and active involvement in the blockchain space, SAMA’s recent announcement stated:
“SAMA is one of the pioneer central banks to experiment [with] blockchain technology for money transfers, this move is one of the key innovative initiatives launched by SAMA in its program to enable and develop Fintech in the Kingdom.”
Blockchain in finance
Increased involvement of governments and central banks in the blockchain sector is playing an important role in the adoption of the technology in finance.
Today, Cointelegraph reported that a major Turkish bank completed its first international trade finance transaction based on blockchain. Another report cited that almost 40% of fintech firms operating in Hong Kong were utilizing distributed ledger technology.
Microsoft, IBM, Hyperledger and other technology and financial organizations have formed an alliance to develop global standards for tokenized ecosystems.
Microsoft’s principal architect, Marley Gray, and Enterprise Ethereum Alliance’s former executive director, Ron Resnick, on Tuesday launched the InterWork Alliance, a nonprofit organization aimed at bringing global standards to the token-based ecosystem.
At launch, the IWA included more than 28 blockchain, technology and financial organizations from around the world, including Microsoft, Chainlink, Hyperledger, IBM, Nasdaq, Accenture and others.
The IWA indicated that startups presently working on tokenized ecosystems are mostly focusing on their individual solutions and marketing their platforms to other businesses.
Setting global standards, it said, will help focus this wide-scale innovation to make a collective impact on businesses. Resnick, IWA’s president, stated:
“For this approach to work, standards are urgently needed around defining what a token is and how its contractual behaviors will work.”
Helping businesses with a common framework
InterWork Alliance plans to work on three different frameworks of global standards for tokenized ecosystems. First, the Token Taxonomy Framework will provide a common language and toolset so that multiple parties can agree on the same terms that define a token and its use.
The InterWork Framework will help businesses compose multiparty contracts from standard, globally recognized clauses set by the IWA. Lastly, the Analytics Framework will help businesses analyze multiparty contracts and utilize artificial intelligence services and market-driven data reporting.
With these, the IWA will eventually work on interoperability between decentralized applications from different blockchain networks.
Standardization for wider adoption
Organizations involved with the IWA are highly optimistic about how bringing global standards to the token ecosystem will further the adoption of distributed business models.
Gray noted that providing industry participants with token standards for a variety of distributed technology use cases can help foster interoperability and drive widespread adoption.
Brian Behlendorf, the executive director of Hyperledger — an IWA member — said:
“Standards play a critical role in the evolution and adoption of any emerging technology. Distributed applications and token-based services will require established frameworks that assure solutions interwork on the business level, regardless of underlying technology platforms.”
“The Alliance will help establish a foundation not only for technology and business but for the changing tokenization landscape as well. A platform-neutral alliance is critical for the entire industry,” said Nitin Gaur, the director of IBM WW Digital Asset Labs.
Crypto adoption appears to be growing across the continent of Africa.
Crypto adoption is making significant advances in Africa, with crypto ownership, trade volume, and regulation all moving toward greater adoption.
A recent report by Arcane Research and Luno found that Uganda, Nigeria, South Africa, Ghana, and Kenya are frequently among the top 10 countries by Google searches for the word “Bitcoin.”
The report describes the continent as “one of, if not the most promising region for the adoption of cryptocurrencies,” emphasizing Africa’s combination of low existing crypto adoption alongside an “enormous” domain possibility.
The firms emphasize that Africa exhibits a young population, frequent monetary crises and currency failures, large unbanked or underbanked populations, and expensive means of payment.
South Africa emerges as crypto hub
While Nigeria has long dominated the continent’s trade volume, the report found that South Africa has the highest percent of cryptocurrency ownership or use among internet users in Africa with 13%, followed by Nigeria with 11%.
Worldwide, South Africa ranks fifth for crypto adoption among connected citizens.
The surge in trade activity saw total P2P volume for South African trade edge out Kenya last week with $1.95 million in trade across Localbitcoins and Paxful.
Last month, South Africa’s financial regulator issued a policy document asserting that crypto assets and activities relating to virtual currencies “can no longer remain outside of the regulatory perimeter.”
P2P volumes surge across Africa
Nigerian P2P trade is rallying to record highs, producing $9.2 million in combined weekly trade.
Kenyan trade has also seen a recent spike, with Localbitcoins trade between BTC and the Kenyan shilling producing its second-strongest week on record for the third consecutive time.
Morocco and Egypt have also posted record trade activity in recent weeks.
The increase in volume across the continent has also seen P2P volume from Sub Saharan Africa beat out Latin America for the first time.
A U.S. think tank working towards a digitized dollar has released a white paper detailing inaugural aims and use cases for a central bank digital currency.
On May 28, the Digital Dollar Project released its white paper, a 30-page document detailing the potential applications of a CBDC. The white paper continues the nascent think tank’s work to push forward development of a digital dollar.
The project and the tenets of the new white paper
The paper details certain core tenets of what it considers a digital dollar and what it will push forward.
The Digital Dollar Project was founded by former leaders of the Commodity Futures Trading Commission and professional services company Accenture. One of those founders is Daniel Gorfine, the head of the CFTC’s fintech office until this past fall.
Gorfine told Cointelegraph, “What we’ve been trying to do through the digital dollar project is catalyze action and this paper is a key step in that direction.”
The new white paper expresses Gorfine and co-founder and former CFTC Chair J. Christopher Giancarlo’s documented interest in operating alongside traditional financial authorities and existing payment mechanisms including cash and Automated Clearing House Technology.
Testing out any new technology
The paper charts out an impressive array of use cases for a digital dollar — for example, the colossal remittances corridor between the United States and Mexico. It also eagerly looks to future pilot programs to test these use cases out as separate components:
“Through engagement with stakeholders, the public sector, and our advisory group, we intend to refine these use cases further and identify potential pilots to test the value hypotheses and inform design decisions.”
Noting the importance of subdividing the wide range of tasks that a digital dollar will be expected to streamline, Gorfine said of pilots:
“Piloting can take place in different pieces or bites relative to the overall topic. You can imagine, for example, exploring tokenization and its impact on financial inclusion and access. You can separately look at government benefits programs and how to disburse to individual recipients.”
Weighing centralization and privacy
In keeping with the project’s desire to work within existing regulatory bounds, it explicitly does not seek to upend the current monetary system of the U.S. Several times it mentions maintaining the format of currency flowing from the Federal Reserve to financial institutions and then to the public:
“A digital dollar will be distributed through the existing two-tiered architecture of commercial banks and regulated intermediaries.”
While some recent legislation has called for direct consumer access to accounts with the Fed, Gorfine explained the Digital Dollar Project’s proposed structure as partially an effort at decentralization:
“Relying primarily on the private sector and regulated banks and money transmitters seems like a much better approach. Public solutions would only make sense if there are remaining gaps and problems to solve for. […] If you think about the way the Fed developed, it was attempting to decentralize the federal banking system and related policy decision making.”
The white paper similarly calls for any digital dollar to operate within existing Know Your Customer or Anti-Money Laundering requirements. At the same time, both the white paper and the project’s founders have historically mentioned privacy as a central concern. That subject remains to be determined, based on the 4th amendment as well as future legislation.
“This is a very meaty and important area. Ultimately, these are policy choices that need to be made by the government,” Gorfine said of privacy. “I think what we flag in the paper is a champion […] model by anchoring and analogizing to physical cash.”
The COVID-19 pandemic stirred up a lot of talk about how to reconfigure the financial system to be more responsive, including a number of bills calling for a digital dollar.
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